The Suez Canal clears


With the freeing of the Ever Given, it appears that the short-term problem affecting the Suez Canal is beginning to be resolved. Admiral Osama Rabie, Managing Director of the Suez Canal Authority commented that the “container ship has been successfully refloated. This was the result of successful push and tow manoeuvres which led to the restoration of 80% of the vessel’s direction; with the stern 102 metres away from the bank of the Canal now instead of 4 meters prior to the refloating. Manoeuvres are set to be resumed once more during high tide at 11:30 am; as it shall reach 2 metres, allowing for the full restoration of the vessel’s direction so it is positioned in the middle of the navigable waterway”. So presumably the canal will be operational shortly.

The impact on the container shipping sector will continue to be considerable, however, measuring its impact will be very difficult. It is unclear how quickly the vessels waiting to enter the canal will take to recommence their voyages, but the delay will probably disrupt the schedules of container ports both in the Mediterranean and Northern Europe, heightening the problem of congestion. The issue of maldistribution of containers worldwide will also be made worse. It also appears that around 20 large container vessels have already been despatched around the Cape of Good Hope, something which will also add to congestion and delays.

The incident was hardly a catastrophe and was resolved fairly quickly. There is a lot of chatter in the media about the supposed vulnerability of just-in-time logistics, however, the incident illustrates that shipping is quite robust due to its flexibility. The size of ultra-large container vessels does create rigidities in the system, and these can be a source of risk but shipping lines judge that the economies of scale they deliver justify this.

At present, the most significant issues for the container shipping sector are the imbalanced nature of global demand and the greater concentration of the ‘supply side’ that has led to higher freight rates. In the short-term, it is this that will heighten the impact of disruption.

Source: Transport Intelligence, March 30, 2021

Author: Thomas Cullen